Alan Fram

Senate rejects GOP, Dem plans on student loans

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WASHINGTON (AP) — The Senate rejected dueling Democratic and Republican plans on Thursday for averting a July 1 doubling of interest rates on federal college loans for 7.4 million students, pushing back efforts to resolve the election-season showdown until next month.

In mostly party-line roll calls, senators voted 62-34 against the GOP package and 51-43 for the Democratic version, with each falling short of the 60 votes needed for approval. Though both defeats were preordained, the twin votes gave lawmakers from each party a chance to show they favor easing students’ financial burdens — and potential grist for campaign ads accusing the other side of opposing the effort.

The Senate planned to leave town later Thursday for a Memorial Day recess running through next week. Neither party wants to be accused of letting the interest rates grow at a time when voters are focused on coping in today’s rough-edged economy, giving each side an incentive to eventually strike a compromise.

A 2007 law gradually reduced interest rates on subsidized Stafford loans for low- and middle-income undergraduates to 3.4 percent. To save money, it mandated that rates return to 6.8 percent for new loans as of July 1.

President Barack Obama has made preventing a rate increase a priority and has appeared at colleges and on television talk shows to promote it. Though some Republicans expressed early concerns that retaining the lower rate would fuel college tuition increases, likely GOP presidential candidate Mitt Romney endorsed freezing the rate and most GOP lawmakers have done the same.

Ten conservative GOP senators opposed their own party’s proposal, with some expressing concerns about budget costs and saying the loan market should set its own prices.

Both measures rejected Thursday would delay the interest rate increase for a year at a cost of $6 billion, but each side’s bill was paid for in a way the other couldn’t tolerate. Democrats proposed raising Social Security and Medicare payroll taxes on high-earning owners of some privately held companies and professional practices, while Republicans would abolish an Obama preventive health program.

That idea drew a White House veto threat when Republicans used it to pay for their House-passed bill in April.

“The Republican proposal is paid for by stripping Americans of lifesaving preventive health care,” said Senate Majority Leader Harry Reid of Nevada, adding, “It would be a shame” to do that.

Senate Minority Leader Mitch McConnell of Kentucky argued that the Democratic plan showed they wanted “a scapegoat more than a solution” because they knew Republicans would oppose its tax provision.

He also tried goading Obama, saying, “If the president’s got time to run around to late-night comedy shows and college campuses talking about this issue, then he can pick up the phone and work out a solution.”

The Education Department expects 7.4 million undergraduates to borrow subsidized Stafford loans next year averaging $4,226. Doubled interest rates would add around $1,000 in costs, which for the typical loan taking 12 years to repay would mean less than $10 monthly in added expense.

The Federal Reserve Bank of New York estimates that at least 37 million Americans owe $870 billion for outstanding student loans, a figure that is growing and that exceeds the money owed for credit cards or auto loans. Four in 10 people under age 40 owe money for a college loan, the bank says.

Congressional GOP pushes for action on taxes

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WASHINGTON (AP) — Republican lawmakers intensified their efforts on Thursday to get quick congressional action on heading off automatic tax increases and revamping the federal tax code.

In a letter to Senate Majority Leader Harry Reid, D-Nev., 41 Senate Republicans said they wanted a vote this summer — before the November elections — on preventing tax increases that will take effect Jan. 1 unless Congress acts. Those increases would be a result of the expiration of tax cuts enacted under President George W. Bush and would affect people across all income levels.

“The time to begin is now. Inaction is irresponsible,” said the letter, which was led by Sen. Orrin Hatch of Utah, top Republican on the Senate Finance Committee.

Reid has shown little appetite for letting tax rates fall for the wealthiest Americans and in recent months has staged votes on bills that would raise taxes on them instead.

Separately, House Ways and Means Committee Chairman Dave Camp said Thursday that he wants to combine a push to head off those tax increases with enactment of procedures that would force Congress to revamp the entire tax code next year.

“Doing so would send a clear, strong message to the markets, to employers and families that Washington is serious about reforming our tax code and putting us on a path to sustained economic growth,” said Camp, R-Mich.

Republicans want to prevent tax increases for all taxpayers, while President Barack Obama and congressional Democrats prefer letting tax rates rise for the highest-earning Americans.

House Speaker John Boehner, R-Ohio, said this week that he plans to have a pre-election vote on heading off the automatic tax increases. That measure would likely go nowhere in the Democratic-led Senate.

Even so, Republicans hope that such a vote would give them a chance to demonstrate their support for tax cuts during the run-up to this year’s presidential and congressional elections. Most Democrats would be likely to oppose such tax cuts unless the wealthy were excluded from them.

The six GOP senators who did not sign the letter to Reid include two facing tough re-election fights this year, Scott Brown of Massachusetts and Dean Heller of Nevada.

It would cost the government an estimated $5.4 trillion over the coming decade to renew the Bush tax cuts, extend a temporary reduction in the alternative minimum tax and this year’s Social Security payroll tax cut, and keep alive a collection of other expiring tax breaks.

A big, expensive collection of budget events will also occur in January, including the start of $1.2 trillion worth of spending cuts and the expiration of this year’s Social Security payroll tax cut. In addition, the government’s borrowing authority is expected to expire around that time.

That confluence of events has fed expectations of a frantic postelection lame-duck session of Congress to address those issues, though many expect final decisions to be postponed until next year.

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Dems, GOP using popular bills to hurt other party

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WASHINGTON (AP) — Congress is producing little this election year that will become law, yet both parties are churning out bills designed to make the other side look bad.

Take a look at separate measures that would protect women from violence, keep student loan rates low and build roads and bridges. Each is a widely shared goal and seemingly easy to enact. But the proposals are caught in pitched battles, each party adding language that infuriates the other.

As a result, the Democratic-led Senate and Republican-run House are writing legislation that dies right away or is assured of going nowhere in the other chamber. Instead of laws, the bills generate grist for fundraising pitches and campaign attack ads.

“It was, ‘Let’s put a bill on the floor that we know Republicans will never support, designed specifically to fail, so we can then spend the week talking about this on the Sunday talk shows and speeches on the floor and missives from the campaign,’” Sen. Marco Rubio, R-Fla., complained last week after GOP senators voted in virtual lockstep to block Democrats’ student loan bill.

The constant wrangling is doing little to appease voters. In this month’s Associated Press-GfK poll, only 18 percent gave favorable grades to Congress. That was slightly better than last summer, but still dreadfully low.

The student loan bill underscored the partisan positioning afoot.

Want to keep interest rates on subsidized Stafford loans from doubling for 7.4 million undergraduates on July 1? If you were a House Democrat, you had to vote for a GOP bill financed by obliterating a preventive health program created by President Barack Obama’s cherished health care overhaul.

If you were a Senate Republican, you had to support a Democratic bill financed by boosting payroll taxes on upscale owners of some privately owned companies — a nonstarter for most Republicans.

Not surprisingly, there were few takers, and neither chamber produced a bill that had any prospect of final approval.

Democrats denied their motivation was producing fodder for campaigns. But they accused House Republicans of doing just that with a highway bill that requires construction of the Keystone XL oil pipeline from Canada to the Texas Gulf Coast, which Obama and many Democrats have opposed for environmental reasons.

“We ought to quit taking jabs at one another to score political points,” said Rep. Nick Rahall, D-W.Va.

The tactic has been given the nickname “poison pill” because it sometimes causes the demise of the legislation to which the provision is attached.

“They do it because, in part, voters are not fully informed about legislation and a lot of votes are difficult to understand,” said Marc Meredith, a political scientist at the University of Pennsylvania who has studied voters’ decision making. “You can put members of Congress in a tough spot because voters aren’t fully informed about why members voted in a certain way.”

Shortly after the House voted April 27 to approve the GOP student loan bill, paid for by cutting Obama’s health overhaul and supported by just 13 Democrats, Republicans sent news releases to dozens of congressional districts.

Democrats decided “protecting the Democrats’ government takeover of health care was more important than helping future college graduates,” the releases said.

Democrats argued it was wrong to cut health care programs to keep student loan interest rates from growing. Yet they were happy to use the tactic after two-thirds of Republican senators voted against a Democratic bill extending programs to protect women from violence and adding new protections for gays and transgender people.

Republicans said Democrats purposely inserted those provisions to make it impossible for many GOP senators to vote “yes.” But that didn’t stop a fundraising email by House Democrats’ campaign arm accusing the GOP of “trying to derail the Violence Against Women Act.”

“We can’t let Republicans Etch A Sketch away their destructive war on women,” it added. That was a reference to a remark by a top aide to GOP presidential hopeful Mitt Romney about the candidate’s ability to recalibrate his positions for the general election.

The parties often disagree over whether a provision is a purposeful poison pill or simply a demonstration of the majority’s ability to write bills reflecting their own priorities.

A GOP measure the House will debate this week renewing violence against women programs drops the Senate-approved language protecting people based on their sexual orientation. It would make it harder for abused illegal immigrants to stay in the U.S. unless they cooperate in investigations about their allegations.

That language is “a poison pill and obnoxious” and will cause many Democrats to oppose the overall bill, said Rep. Jerrold Nadler, D-N.Y. “It’s changing the law in a way we can’t accept because it will make more women get battered” because their cooperation would make them vulnerable to further abuse from their spouses, he said.

Rep. Sandy Adams, the bill’s chief sponsor, said that provision was not a poison pill. Adams, R-Fla., said it was included to try reducing fraudulent claims of abuse “so the money we’re providing goes to victims and their services.

“At the end of the day, I’d hope everyone agrees that we want these services provided for our victims,” she said.

Other instances in which one side included language sure to cause the other party to oppose a bill that otherwise seemed destined for approval include:

—A bill last summer financing Federal Aviation Administration programs. House Republicans inserted language overturning an agency rule making it easier for airline and railroad workers to unionize;

—Last winter’s bitter fight over extending Social Security payroll tax cuts through 2012. An early Senate Democratic bill financed the cost with a tax on people earning over $1 million a year, while a GOP version trimmed the federal bureaucracy and extended a pay freeze on civil servants.

—Bills financing the Iraq war under President George W. Bush, into which House Democrats put language forcing troop withdrawals.

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White House pressures GOP on student loan bill

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White House pressures GOP on student loan billFILE - In this March 13, 2012, file photo Sen. Jack Reed, D-R.I., joins students at a Capitol Hill news conference to announce the collection of over 130,000 letters to Congress to prevent student loan interest rates from doubling this July. With Congress returning from a weeklong spring recess, the Senate plans to vote Tuesday, May 8, on whether to start debating a Democratic plan to keep college loan interest rates for 7.4 million students from doubling. The $6 billion bill would be paid for by collecting more Social Security and Medicare payroll taxes from high-earning owners of some privately held corporations. (AP Photo/Manuel Balce Ceneta, File)(Credit: AP)

WASHINGTON (AP) — The White House pressed Republicans Monday to back Democratic legislation preventing interest rates on federal student loans from doubling in July as the two parties remained deadlocked over how to pay for the move.

“As the economy continues to recover, and at a time when market interest rates are at historic lows, students who rely on loans to finance postsecondary education should not be burdened with additional college debt,” the White House said.

The statement, which seemed aimed at raising the discomfort level among GOP senators, came as the Senate debated a $6 billion Democratic bill keeping today’s subsidized Stafford loan interest rates of 3.4 percent from doubling for another year.

Republicans back freezing the interest rates too, but oppose how Democrats would finance their measure. Democrats would force owners of many privately owned companies to pay more Social Security and Medicare payroll taxes.

“They’d like to raise money in the middle of the largest recession we’ve had since the Great Depression on job creators,” said Sen. Lamar Alexander, R-Tenn.

Alexander has introduced a GOP version paid for by eliminating a preventive health fund created by President Barack Obama’s 2010 revamping of the nation’s health care system. Republicans are demanding a vote on their alternative measure.

The election-year standoff affects 7.4 million students, whose Stafford borrowing costs would rise by an average $1,000 over the lives of their loans if interest costs doubled.

The White House has threatened to veto a House-approved GOP bill similar to Alexander’s. Administration officials and congressional Democrats say they oppose cuts in preventive health programs.

With presidential and congressional elections in November, neither party wants to be seen as causing students’ college expenses to grow. Because neither appears to have the 60 votes needed to push its version through the Senate, it seems likely they will have to find a compromise way to pay for the effort.

Stafford loans are made to low- and middle-income students. The Department of Education estimates students will borrow $31.6 billion in Stafford loans in the year beginning July 1, average $4,226 for each student.

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White House threatens to veto student loan bill

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White House threatens to veto student loan billHouse Minority Leader Nancy Pelosi of Calif. gestures during her weekly a news conference on Capitol Hill in Washington, Thursday, April 26, 2012. (AP Photo/Jacquelyn Martin)(Credit: AP)

WASHINGTON (AP) — The White House has threatened to veto a Republican bill keeping federal student loan rates from rising this summer.

A White House statement blamed the way the legislation would pay its $5.9 billion costs: by cutting a preventive health fund created under President Barack Obama’s health care overhaul law of 2010.

The White House called those health cuts politically motivated and not a serious response to the problems students face.

The veto threat was issued as the GOP-run House began debating the legislation.

Even if it passes as expected, the measure seems certain to go nowhere in the Democrat-controlled Senate. Democrats want to pay for the measure by boosting payroll taxes paid by high-earning owners of some private firms.

Political battle over student loans heating up

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Political battle over student loans heating upHouse Speaker John Boehner of Ohio, accompanied by House Education and the Workforce Committee Chairman Rep. John Kline, R-Minn., left, and Rep. Jeb Hensarling, R-Texas, speak about a student loans bill, Wednesday, April 25, 2012, on Capitol Hill in Washington. (AP Photo/Charles Dharapak)(Credit: AP)

WASHINGTON (AP) — Democrats and Republicans alike say they want to prevent the cost of federal loans from ballooning for millions of students. But the effort has evolved into an election-year battle each side is using to embarrass the other and spotlight its own priorities to voters.

In the latest political chess move, Speaker John Boehner, R-Ohio, scheduled a House vote for Friday on legislation preventing the 3.4 percent interest rate on subsidized Stafford student loans from doubling as scheduled on July 1. In a bitter pill for Democrats, the measure’s $5.9 billion cost would be paid for with cuts from President Barack Obama’s health care overhaul bill.

Boehner announced the vote in an abruptly called news conference Wednesday that followed days of pounding by Obama and congressional Democrats. It also came two days after the GOP’s presumptive presidential candidate, Mitt Romney, tried defusing the issue by embracing the call for freezing interest rates, putting more pressure on congressional Republicans to back the effort or look isolated.

“What Washington shouldn’t be doing is exploiting the challenges that young Americans face for political gain,” Boehner said. He also accused the president of “campaigning and trying to invent a fight where there isn’t and never has been one.”

Congressional GOP aides said Republicans were working on the legislation for some time and unveiled their bill to try to prevent Obama from escalating the dispute. The aides spoke on condition of anonymity to discuss party strategy.

Hours before Boehner spoke, Obama wrapped up a two-day trip to three college campuses in which he cast himself as the students’ champion and Republicans as the ones standing in the way of resolving the problem.

“How can we want to maintain tax cuts for the wealthiest Americans who don’t need them and weren’t even asking for them?” Obama said at the University of Iowa, mocking the GOP. “I don’t need one. I needed help back when I was your age.”

The backdrop to the student loan fight is a push by both parties to appeal to younger voters, an Obama strength in his 2008 election win, and to signal their sensitivity to families’ struggles during the economy’s prolonged slump. Letting the loan rate double this summer would cost 7.4 million Stafford loan recipients an average $1,000, according to the administration.

At the same time, each side wants to force the other to take politically uncomfortable votes.

The House GOP bill is paid by cutting health care programs Democrats treasure. The Senate Democratic version would force high-earning owners of some privately owned corporations to pay more Social Security and Medicare payroll taxes, violating Republicans’ anti-tax doctrine.

The House GOP bill would cut a $17 billion prevention and public health fund Obama’s law created for immunization campaigns, research, screenings and wellness education. Republicans have dubbed it a “slush fund” and sought to cut it to finance a variety of projects, succeeding earlier this year to help pay for maintaining doctors’ Medicare reimbursements.

“Rather than letting student loans become a pawn in the latest political fight, the House will show our commitment to our nation’s students and extend the current rates without adding a dime to the deficit,” said House Majority Leader Eric Cantor, R-Va.

It didn’t take long for the measure to stir up opposition among Democrats.

“We should be able to work together to find offsets that don’t penalize middle-class families or undermine efforts to help more Americans stay healthy,” said White House spokesman Nick Papas, who expressed confidence that a compromise could be reached.

Rep. George Miller of California, top Democrat on the House Education Committee, accused Republicans of trying to keep student interest rates low by “extracting the price from women and children.”

House Minority Leader Nancy Pelosi, D-Calif., a supporter of the health fund Republicans targeted, said the GOP had made “a dramatic reversal” because Republicans had recently pushed a federal budget through the House that would have let student interest rates double. But her statement stopped short of saying she would oppose the GOP bill on Friday.

Senate Majority Leader Harry Reid, D-Nev., said Democrats opposed cutting the health program “just so Republicans can continue protecting millionaire tax dodgers.”

That reference was to his own legislation, which would pay for keeping student loan interest rates level for a year by forcing high-income owners of some privately held corporations to pay more Social Security and Medicare payroll taxes.

Senate Republicans say they support freezing students’ interest rates but have strongly opposed boosting those companies’ payroll taxes.

“Democrats want to pay for it by raiding Social Security and Medicare, and by making it even harder for small businesses to hire,” said Senate Minority Leader Mitch McConnell, R-Ky. “We happen to think that at a time when millions of Americans and countless college students can’t even find a decent job, it makes no sense whatsoever to punish the very businesses we’re counting on to hire them.”

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

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